Is Indiana's Tax Amnesty Brilliant or Brutally Unfair?

According to the Indiana Capital Chronicle, if you’re a business or an individual with overdue taxes in the state of Indiana, you’re going to have your first chance in more than a decade to pay those bills off without penalty.

How Indiana’s Tax Amnesty Program Will Work

The Indiana Department of Revenue has set a tax amnesty period, according to the Capital Chronicle, running from July 15th until September 9th. The program has been in the works since legislators instructed the agency to create it in last year’s state budget. We’ll get to that in a second, because the reason they did this is interesting. The admission they made by doing it is pretty telling. They set an eight-week period where, if people come and pay their outstanding taxes, there are no penalties, no criminal charges, nothing. The key requirement is that the tax delinquency had to exist before January 1st, 2024. These are old tax penalties. If you voluntarily pay during that amnesty window—from July 15th through September 9th—you won’t face civil penalties, criminal penalties, late payment fees, interest, or collection fees. Part of me looks at that and says it probably could open up an opportunity for the state to collect a good amount of revenue. The state is estimating it will collect somewhere between $156 million and $277 million. That’s a lot of money. The last time Indiana did something like this was in 2015. That program collected about $188.5 million, which at the time was roughly one-third of the total liabilities owed by delinquent taxpayers. So almost one-third of the unpaid taxes ended up getting paid off during that amnesty period.

Why Some Taxpayers Think the Amnesty Is Unfair

Part of me says, okay, that’s a lot of money. Maybe that’s a good thing. Maybe I should be supportive of this. But then I think about the other side of it. I pay my taxes every year. I pay them on time. I’m an upstanding citizen. I take money out of my account and give it to the government when it’s due. So why are these people getting a free pass? Why are people who held onto their money, who didn’t pay during the applicable time frame, suddenly allowed to walk in and settle up without penalties? Those people held onto their money and used it however they wanted. Maybe they spent it on video games or candy bars or cigarette machines. Meanwhile, the people who followed the rules paid everything on time. So there’s a real tension here, because you can see both sides of the issue.

How Much Money the State Could Collect

Ten or eleven years ago, the state collected a huge amount of money this way. Roughly one-third of the unpaid taxes were collected, and that gave the state a large influx of cash to use on other things. That’s significant. And it’s important to note where the money will go this time. The revenue collected during this amnesty program will go into the state’s general fund. That means the state can use it for whatever it wants. Whatever program or spending project the state decides to pursue, that money can be used for it.

Where the Tax Amnesty Revenue Could End Up Going

That’s where I start to get concerned. The governor recently said that Interstate 70 is in such poor condition that taxes need to be raised by $6.5 billion to address infrastructure issues. If that’s the case, shouldn’t the first $200 million from this tax amnesty go toward that project? You could say the first $200 million collected will go toward fixing I-70. That would reduce the amount of new taxes needed from $6.5 billion to about $6.3 billion. Instead, the money is going into the general fund, which means it could be used for any project lawmakers want. That could include something like the Mid-States Corridor in southwest Indiana. When money goes into the general fund, it becomes available for whatever spending priorities the state decides to pursue. Let me know how you feel about this. If you’re watching on YouTube, leave a comment in the chat. We’ll read some of those later in the program.

Why the Program Exists in the First Place

What bothers me most about this situation is that it’s not being done because the state suddenly feels generous. It’s being done out of desperation by the General Assembly because of how badly they’ve mismanaged the state’s finances. Think back to last year’s legislative session. Despite having months to debate and craft a budget, lawmakers got to the end of the session and suddenly realized they were facing a major shortfall. Legislative leaders essentially looked around and realized they were about $2 billion short. So what did they do? They raised taxes by $1 billion. Later it turned out that the revenue projections were way off. Like many things in government, the forecasts were hundreds of millions of dollars wrong. In fact, it turned out the state actually had plenty of money. That raises an obvious question: if the projections were wrong and the state had more money than expected, do taxpayers get their billion dollars back? The answer was no. Government’s response was essentially, “You’re not getting your money back. Pay up.” The Capital Chronicle quoted lawmakers explaining why the amnesty program was created. Legislators turned to the tax amnesty plan last year as a way to fill the bucket with additional revenue after a dismal tax collections forecast in April 2025. As Travis Holdman, chair of the Senate Tax and Fiscal Policy Committee, explained, lawmakers were trying to find ways to bring in more money. That’s the key point. This wasn’t about generosity. It was an act of desperation. The state had mismanaged its finances and struggled to accurately project its revenues, and this amnesty program became a way to try to make up the difference.